According to new regulations passed by the Swedish Parliament this week, private individuals will be able to rent out two homes at the same time, with greater freedom to set the rent. Additionally, subletting will be permitted for longer periods than before. However, the condominium industry is critical of these changes.
In May last year, the inquiry A More Flexible Rental Market presented its conclusions. The task was partly to propose how regulations regarding private individuals renting out homes could be changed to facilitate such rentals, and partly to suggest how rental laws could be amended to provide for easier renting out of homes to companies. The overarching aim was said to be promoting a better use of the existing housing stock.
“For the housing stock to be used more efficiently, it needs to be easier to rent out your home. When the opportunities to sublet condominiums increase, more homes can become available. This is an important goal for the government,” said Minister for Infrastructure and Housing Andreas Carlson (Christian Democrats) in March.
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The government’s proposal includes, among other things:
A new private subletting law, intended to provide a clearer and more accessible set of rules for private individuals renting out homes. The law should cover the rental of up to two dwellings that are not part of one’s own residence. There will be freedom of contract, but with protection against unreasonable rents.
Expanded opportunities to sublet condominiums. Previous rental history will only be considered if it has occurred to a significant extent, which means subletting can take place for longer periods than today.
A modernized block leasing system, better adapted to meet companies’ needs for staff accommodation and to facilitate the rental of shared housing where tenants rent rooms and share common areas.
Facing Criticism
The new rules take effect on July 1 this year. At the same time, strong criticism is coming from several quarters. Many fear that the rules could lead to housing being treated more as investment objects than as homes, and that condominiums will be bought solely for the purpose of being rented out.
“A clearer law for private subletting is basically welcome. But it is problematic that a private individual who rents out two homes gets more favorable rules than a small property owner running the same business with just a few more apartments,” said Johan Kleveland, legal adviser at the property owners’ association (Fastighetsägarna), earlier this year.
According to Fastighetsägarna, this risks creating unclear rules of the game in the rental market.
“It distorts competition and clearly shows the need for a more thorough and unified reform of the rent law.”
Making it easier for condominium owners to sublet their homes, even if they have rented them out before, is not something Fastighetsägarna wants either.
“Since 2014 it has been possible to rent out in more cases, and today it is really only if there are no reasons other than to make money that a sublet is not approved. We see no need to change the law. Further relaxing the rules for subletting therefore risks leading to speculative purchases and increased insecurity for other condominium owners in the building.”
“Appalling”
Another strong critic is Johan Nyhus, chairman of HSB.
“I think it is appalling, to be frank. A condominium should be used for permanent residence. It is a home, not a hotel room. The risk now increases substantially that more condominiums will be bought or kept solely to be rented out for profit,” he says.
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In September last year, HSB recommended against the proposals for expanded subletting. HSB has long warned that a larger proportion of subletted tenants increases the risk of insecurity in housing, speculative buying, and decreased engagement in the housing association.
“The government is interfering with property rights in a way that would be unthinkable for other forms of tenure. The decision-making power of housing associations is being reduced, even though there are good reasons for property owners to have control over sublets. This puts security at risk in the homes of millions of Swedes.”
Not Giving Up
According to a survey from last year, nearly half of those who work or have worked on a condominium board have experienced problems with subletting, even under the current rules.
“The new rules turn the fundamentals of condominiums upside down. This is not an issue that we will let go of lightly,” says Johan Nyhus.
Condominium Associations, HSB National Association, and Riksbyggen have also pointed out the risks associated with the new rules.